Shriram Life Insurance will seek a one-year forbearance from the mandatory shift to Indian Accounting Standards (Ind AS)-based financial reporting. Irdai has approved its rollout from this fiscal. Managing director and chief executive Casparus JH Kromhout tells Narayanan V about the FY27 outlook and the impact of recent regulatory changes on the business. Excerpts:
Your view on the industry’s performance in FY26?
FY26 has been somewhat mixed both for the industry as well as Shriram Life Insurance. The GST rate cut is clearly a positive, as it has made insurance more affordable for customers, particularly on the term side. This is important because the industry needs to move more towards protection, rather than just savings and investment products, given that its core purpose is to protect families.
Improving affordability and access is, therefore, a key positive. On the downside, insurers are now unable to set off input tax credit, which adds a layer of cost. The industry is still adjusting to the regulatory changes with regard to special surrender value (SSV), along with the impact of the labour codes. Typically, one would expect a major structural change every two-three years, but this year saw three significant shifts: GST, SSV, and labour codes came together. As a result, the industry has to recalibrate to ensure sustainability, solvency, and compliance are maintained.
Have the new SSV norms led to higher policy surrenders?
We are seeing a slight increase in surrenders, but it is not significant. We largely serve lower-income segments, where persistence tends to be lower because many of our customers are small business owners and farmers. They may not always have the liquidity at the time of premium renewal, so we have to be very flexible in managing persistence. We have observed a similar trend with our counterpart, Sanlam, in South Africa.
Surrender levels tend to be higher, and with higher SSV, the impact becomes more pronounced. In our case, the average 13th-month persistence is around 65%. Within this, persistence in lower-income segments can be below 50–60%, while in higher-income segments, it is closer to industry levels of around 80%.
Our persistence is structurally lower because nearly 90% of our business comes from these lower-income segments. As a result, higher SSV has an impact on profitability, solvency, and the cost-carrying capacity of our products.
Do you plan to raise capital to maintain solvency levels?
We will be bringing in capital this fiscal to ensure that we remain above the statutory solvency limits. This is not driven by regulatory changes, but because we are growing fast and that requires additional capital. Our business plan for 2027 is quite strong, and we want to ensure the company is well capitalised. We are currently in the process of assessing the capital requirement, so I won’t be able to share the exact number.
Have you implemented Ind-AS from April 1, or are you seeking a forbearance?
We will be applying for a one-year forbearance from Irdai. I think almost the entire industry is doing the same. We have been preparing for this for some time now, but it is still a fairly large piece of work. Something of this scale also requires a lot of clarifications on how certain aspects need to be handled. We do expect some level of clarification to emerge over time, so we will be seeking forbearance for now.
What is your growth target for FY27?
We have grown at around 35% CAGR over the last three years up to 2025, effectively tripling the size of the business during this period. We will likely cross Rs 5,000 crore in gross written premium in FY26. As part of our 2030 vision set in 2023, we had planned for a 22–27% CAGR. We initially saw growth of 24%, then 39%, and even 45%, so the required run rate for the remaining years is now slightly lower. From here on, we are broadly targeting around 20% growth till 2030.